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The European Commission has published a proposal for a Corporate Sustainability Reporting Directive (2021/0104) (“CSRD”), which forms just one part of a comprehensive package of sustainable finance measures (see our blog here).  The Commission has put forward these measures in response to demand for stronger and wider sustainability reporting standards, over and above what the EU Non-Financial Reporting Directive currently provides.  The CSRD seeks to mandate sustainability reporting and assurance through the amendment of existing EU laws, including the Transparency Directive, the Accounting Directive, and the Audit Directive.  More fundamentally, according to the Commission, it will move the EU one step closer to realizing its aim of having sustainability reporting be “on a par” with financial reporting, in terms of attached weight and importance.  This is reflected in the change of terminology used in the CSRD proposal, from a focus on “non-financial” information reporting, to “sustainability”.

We cover below the background and detail, but in summary, these are the key elements of the CSRD proposal that corporates should be aware of:

  • Scope: The CSRD reporting requirements will apply to all large EU companies and all listed companies, including listed small and medium-sized enterprises (“SMEs”). This is estimated to cover around 49,000 companies.
  • Reporting: The so-called “double materiality” principle remains, but in-scope companies will now have to report according to mandatory sustainability standards. Simpler and “proportionate” standards will apply to listed SMEs.
  • Audit: The CSRD will require, for the first time, a general EU-wide audit (assurance) requirement for sustainability information.
  • Digitization: The sustainability information must be published in companies’ management reports — and not separately reported — and the information will need to be digitized or “tagged” so it can be incorporated into a planned European Single Access Point.
  • Timing: If the proposal is adopted and standards can be agreed in line with current ambitious estimates, large in-scope companies must comply from financial years starting on or after 1 January 2023, publishing reports from 2024; whilst SMEs have to comply from 1 January 2026.

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Continue Reading The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know

The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”).  This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.

Sustainable Finance Package: Context and Comment

The Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law.  Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.…

Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

This is the eleventh in our series on the “ABCs of the AJP.”

America’s kids are the beneficiaries of many of the provisions of President Biden’s Jobs Plan, and several of the proposals would benefit them and their caretakers specifically.  Children have become a focus point of discussions about climate change, because absent intervention they are poised to inherit a world that suffers from its negative effects without having contributed meaningfully to the emissions that bring it about.  This has been a central narrative of the long-running Juliana litigation, for example.  The Biden Administration has also recognized the intergenerational inequity of climate change in other policy initiatives, for example in its ongoing efforts to revise the social cost of greenhouse gases.
Continue Reading Kids and a Sustainable Future

This blog is the eighth in a series, “The ABCs of the AJP.”

The latest Energy Transition technology now attracting massive investment and policy attention is “green hydrogen” produced using renewable energy to separate hydrogen from water that can be used both for bulk energy storage and then used to fuel gas-fired power plants or hard-to-abate sectors such as manufacturing, shipping and long-haul trucking.   President Biden’s American Jobs Plan matches that level of investment and attention by proposing 15 decarbonized hydrogen demonstration projects in distressed communities and by including hydrogen among an additional $15 billion increase in funding for climate R&D priorities.  The AJP also includes an expansion of production tax credits for energy storage, that has led to the introduction of at least one bill — SB 1017 – endorsed by the American Clean Power Association proposing a $3/kg tax credit for green hydrogen. …
Continue Reading Hastening the Hydrogen Economy

This blog is the sixth in a series, “The ABCs of the AJP.”

One of the key underpinnings of the case for climate legislation is the idea that natural and working lands will suffer without swift and meaningful action. President Biden’s American Jobs Plan (AJP) proposes to “protect and, where necessary, restore nature-based infrastructure – our lands, forests, wetlands, watersheds, and coastal and ocean resources.” But what should that look like? And how will the new administration find common ground with lawmakers who fear that forest conservation can only come at the expense of rural communities and the industries that rely on these resources?
Continue Reading Finding the Common Ground for Forests

This blog is the third in a series, “The ABCs of the AJP.”

An animating principle of President Biden’s American Jobs Plan (AJP) is the urgency to address climate change.  But a cross-current is competition with China.  This comes through not as subtext, but as the stated purpose.  According to the White House, “the President’s plan will unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China.”…

Continue Reading The Climate Crisis and China

This blog is the second in a series, “The ABCs of the AJP.”

The American Jobs Plan recognizes that a net-zero economy will require significant innovation in and deployment of energy storage technology.  For example, the President’s efforts to decarbonize the power sector by 2035 will include increased reliance of renewable energy sources, which will benefit greatly from utility-scale battery systems.  The push to electrify the transportation sector also depends on cost-competitive batteries powering vehicles.  Here, we present three ways in which AJP seeks to advance battery technology and adoption.
Continue Reading Building Back Better with Batteries

The election of President Joe Biden in the US and the fast-approaching COP26 have focused minds on the importance of taking concrete steps to tackle climate change. This week has been an important part of the build-up to Glasgow and has witnessed a number of important climate change events. The European Commission released its Draft Taxonomy Climate Delegated Act, under the Taxonomy Regulation.  The US hosted the Climate Change Leaders Summit.  The banking sector launched two new net zero initiatives.  And the US, EU and UK have updated their emissions reductions targets.
Continue Reading A Week of Climate Action

Today, on Earth Day, the United States made a bold move to resume international leadership on climate change by announcing the United States’ new target to achieve a 50 to 52 percent reduction in economy-wide greenhouse gas pollution from 2005 levels by 2030.  The President announced the target on the first day of the Leaders Summit on Climate, which he is hosting to raise ambition and set the stage for a successful United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP) later this year in Glasgow.
Continue Reading The United States’ New Nationally Determined Contribution (NDC) and the ABCs of the American Jobs Plan (AJP)

On March 25, 2021, the Supreme Court of Canada upheld the Greenhouse Gas Pollution Pricing Act (“GGPPA”), which establishes a national pricing benchmark for greenhouse gas (“GHG”) emissions. Reference re Greenhouse Gas Pollution Pricing Act, case numbers 38663, 38781, and 39116. Several provinces challenged the law, arguing that it was unconstitutional and that it imposed unlawful taxes. In upholding the constitutionality of Canada’s federal pricing program, the decision is a strong affirmation of the need to impose a uniform price on carbon emissions across jurisdictions and has some significant “upshot” implications for businesses and policymakers in the United States.
Continue Reading Canada Given Green Light to Carbon Pricing: The Supreme Court of Canada Upholds the Greenhouse Gas Pollution Pricing Act